Estimate the home price you can afford based on your income, debts, down payment, and loan terms.
Frequently Asked Questions
What is the 28/36 rule?
A common affordability guideline: your housing payment shouldn't exceed 28% of gross monthly income (front-end ratio), and total debt payments including housing shouldn't exceed 36% (back-end ratio).
Why does this calculator ask for property tax and insurance?
Lenders qualify you based on total monthly housing cost (principal, interest, taxes, and insurance), not just the loan payment, so subtracting an estimate for taxes and insurance gives a more realistic loan amount.
How does a larger down payment change affordability?
A larger down payment directly increases the home price you can afford, dollar for dollar, without changing your monthly payment.
How home affordability is calculated
This calculator applies the common 28/36 rule: your housing payment shouldn’t exceed 28% of gross monthly income, and total debts (including housing) shouldn’t exceed 36%. After subtracting an estimate for property tax and insurance, the remaining budget is run backward through the loan amortization formula to find your maximum affordable loan amount, then your down payment is added on top.
How to use this affordability calculator
- Enter your annual gross income and monthly debt payments.
- Enter your planned down payment.
- Enter your expected interest rate and loan term.
- Enter estimated annual property tax and insurance, then click Calculate.
Beyond the 28/36 rule
The 28/36 rule is a useful starting benchmark, but actual mortgage approval also depends on your credit score, down payment size, loan type, and local property tax and insurance rates, which vary significantly by area. Lenders may qualify you for more or less than this calculator’s estimate depending on your full financial picture.
Factors that affect how much house you can afford
- Down payment: A larger down payment directly increases your affordable purchase price and can help you avoid private mortgage insurance (PMI), typically required below 20% down.
- Existing debt: Car payments, student loans, and credit card debt all reduce the housing budget lenders will approve, since they count toward your total debt-to-income ratio.
- Interest rate environment: Even a 1% rate change can shift your affordable price range by tens of thousands of dollars.
- Property taxes and insurance: These vary widely by location and are often underestimated by first-time buyers.
Tips for improving your affordability
Paying down existing debt before applying can improve your debt-to-income ratio more than most other single actions. Getting pre-approved (not just pre-qualified) gives you a realistic, lender-verified budget before house-hunting. Budget for closing costs, moving expenses, and an emergency fund separately from your down payment.
Expert insight: affordability is about more than qualifying
The 28/36 rule (housing costs under 28% of gross income, total debt under 36%) is the standard lenders use, but financial planner Eric Roberge frames the real question differently: not whether you can qualify for a mortgage, but whether the home you buy still supports your broader financial goals. Many planners recommend budgeting toward the more conservative end of that range, and keeping several months of expenses in savings even after covering the down payment and closing costs.
Related calculators
Disclaimer: This calculator is provided for general informational and educational purposes only and does not constitute financial, investment, tax, or legal advice. Results are estimates based on the values you enter and should not be relied upon as the sole basis for any financial or other decision. Past performance and projected figures are not a guarantee of future results. Always consult a qualified professional before making financial decisions. See our Legal Notice and Privacy Policy for more information.